Trump budget takes aim at university grants to cover ‘indirect’ research costs

The Trump administration is taking aim at billions in grant funding distributed each year to universities and research institutions to cover the overhead costs of running their labs.

University administrators say they rely on these grants, which amounted to more than $6 billion last year, to keep their research running smoothly; the funding pays to keep the freezers running, the lights on, and their laboratories stocked with supplies. But in a detailed budget proposal released Monday evening, the administration calls for “critical reform” at the National Institutes of Health and targets indirect grants in particular.

The new budget plan calls for a slashing the overall NIH budget by nearly 20 percent, or $5.7 billion.

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Instead of allowing each institution to negotiate its own indirect cost rate, the new budget-in-brief calls for a uniform, capped rate for all grantees. It argues that such an approach “mitigates the risk for fraud and abuse.”

The budget document does not give details on the capped rate. But two NIH sources told the Atlantic last week that indirect costs may be capped at 10 percent. That would be a substantial departure from the status quo: Most universities have negotiated a rate of between 50 and 60 percent, according to a 2014 Nature investigation.

In return, the administration appears to promise regulatory relief — which is something that university administrators have been seeking for years. “NIH will implement reforms to release grantees from the costly and time-consuming indirect rate setting process and reporting requirements,” the budget declares.

The administration makes a point of noting in the budget document that “other entities” like private foundations and payers “spend a much higher portion of their grants on direct science.” Indeed, the Gates Foundation caps its reimbursement rate for indirect costs at 10 percent.

Maryland Congressman Andy Harris, who has spoken out before on indirect costs, said he would support the NIH budget cuts, but only with the provision that indirect costs be capped. Health and Human Services Secretary Tom Price first hinted that indirect cuts could get cut back in March, when he said he was “struck by one thing at NIH” — that 30 percent of grant funds cover to indirect expenses, which he said means that taxpayer dollars are supporting “something other than the research being done.”

The administration is also likely to make the point that many of the private institutions getting taxpayer funds to cover their light bills are quite wealthy, with endowments in the billions — or tens of billions. But the money also goes to public universities that don’t have anywhere near the resources of a Harvard or a Stanford.

And any proposal to cut indirect costs is likely to kick up an outcry from universities and other research institutions. Since colleges in every state receive federal research funds, they make a potent lobbying force.

Capping indirect costs at 10 percent, should that come to pass, “would seriously handicap the American research enterprise, in addition to immediately producing layoffs of thousands of fairly well-paid positions,” said Dr. Ross McKinney, chief scientific officer of the Association of American Medical Colleges.

“I’m willing to look at anything that saves money, but you’d still be losing a lot of the support system for biomedical research,” said Congressman Tom Cole of Oklahoma, a Republican who chairs the House health appropriations subcommittee, and who came out against proposed NIH cuts for 2017. “So until we have the chance to examine that and what the consequences are for research universities and institutions, it’s premature to embrace.”